The following data pertain to the three products produced by Beta Corporation: ?

Question

The following data pertain to the three products produced by Beta Corporation: ?

____________________A_________________________ B__________________ C

Selling price per unit__$6.00______________________ $8.00 _______________$9.00

Variable costs per unit_ 4.00 ______________________4.00 _________________4.00

Contribution margin per unit_$2.00_________________ $4.00 _________________$5.00 ?

Fixed costs are $77,000 per month.

Twenty percent of all units sold are Product A, fifty-five percent are Product B, and twenty-five percent are Product C.

What is the monthly break-even point for total units?

Explanation / Answer

break-even point for total units = Fixed Cost / Weighted Contribution Margin Per Unit

= $ 77,000 / $ 3.85

= 20,000 Units

Hence the correct answer is 20,000 Units

Note :

Weighted Contribution Margin Per Unit:

A B C Total Selling Price Per Unit 6 8 9 Less: variable Cost Per Unit 4 4 4 Contribution Margin Per Unit 2 4 5 Weights 20% 55% 25% Weighted Contribution Margin Per Unit(Contribution Margin Per Unit * Weights) 0.4 2.2 1.25 3.85

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